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Unformatted text preview: Review, PassMaster Questions Lecture: Regulation 3 Choice "c" is incorrect. Corporations can claim the alternative fuel production credit. Choice "d" is incorrect. Corporations can claim the general business credit. CPA-02157 Type1 M/C A-D Corr Ans: D PM#78 R 3-01 60. CPA-02157 PII May 93 #52 Page 38 Acme Corp. has two common stockholders. Acme derives all of its income from investments in stocks and securities, and it regularly distributes 51% of its taxable income as dividends to its stockholders. Acme is a: a. b. c. d. Corporation subject to tax only on income not distributed to stockholders. Corporation subject to the accumulated earnings tax. Regulated investment company. Personal holding company. CPA-02157 Explanation Choice "d" is correct. A corporation is a personal holding company (PHC) if (1) at any time during the last half of the taxable year more than 50% of the value of the outstanding stock is owned by 5 or fewer individuals, and (2) at least 60% of its adjusted ordinary gro...
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